Infrastructure Investment Trust (InvIT) bonds, a new mechanism to finance infrastructure projects through private investments, will help poor individuals get healthy return while at the same solve the problem of funding gaps.
Nitin Gandkari, union minister in-charge of road transport and highways, today said that the new avenue will be aimed at attracting common men into investing public infrastructure.
“I don’t say this openly, but I have decided that I now make roads with money collected from poor countrymen. We don’t have any dearth of money [funding]. I am keeping the InvIT bonds for the [common] public. I often encourage people like peons, [police] constables or labourers to invest in InvIT bonds, I assure you of 8.05% annual interest. And for retired pensioners, the return will be deposited tother accounts on a monthly basis,” said Gadkari, while talking at the Business Today Banking & Economy Summit in GIFT City, Gandhinagar. Currently, the National Highway Authority of India (NHAI) has an annual income of Rs 50,000 crore from highway tolls, which will rise to Rs 145,000 crore in two years.
“I want to make the poor people rich. There is not constraint in flow of money. The retired persons or small time labourers get 8.05% return on their investments that will be a relief for them,” he said. An Infrastructure Investment Trust or InvIT is like a mutual fund, which enables direct investment of money from individual and institutional investors in infrastructure projects to earn a portion of the income as return. The InvIT is designed as a tiered structure with sponsor (any company or LLP or body corporate which sets up the InvIT) setting up the InvIT which in turn invests into the eligible infrastructure projects either directly or via special purpose vehicles (SPV). InvIT are regulated by the SEBI (Infrastructure Investment Trusts) Regulations, 2014.
Recalling his earlier experience of InvIT’s initial success, Gandkari said that when the NHAI InvIT was launched, within hours it was oversubscribed by seven times.
Recently, the NHAI through its third tranche of InvIT raised unit capital of around Rs 7,272 crore from marquee domestic and international investors and debt of around Rs 9,000 crore from Indian lenders, to fund the acquisition of national highway stretches, at a base concession fee of around Rs 15,625 crore, and additional concessional fees of Rs 75 crore.
